New IAFF (firefighter) contract reduces retirement benefits

November 24, 2014

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Firefighter pension benefit changes contained in the collective bargaining agreement between the City of Lansing and International Association of Firefighters (IAFF) Local 421, ratified May 19, 2014 are in the process of being incorporated into the City ordinances. A public hearing will be held at the Monday, December 8 city council meeting.

 

I emailed a FOIA request to the city attorney on November 19 asking for a copy of the new contract. In the meantime, we can see some of the changes as reflected in proposed ordinance changes. Those proposed changes are included in the packet for the November 24 city council meeting. The changes are to the Police and Fire Retirement System, and most apply to new firefighters:

  • Minimum retirement age. New firefighters - firefighters hired on or after May 19, 2014 - cannot retire before age 50. Everyone else can still retire at any age with 25 years of service.

  • Limit on pension amount. The pension of any firefighter who retires on or after October 1, 2014 is limited to 110% of base wage at the time of separation. The ordinance defines base wage as base wage, which seems kind of stupid. It also defines annual base salary as "the salary paid by the city to a police officer or firefighter for 12 consecutive month of credited service." It would make more sense to limit the pension to 110% of annual base salary rather than 110% of base wage, which is undefined, but what I would assume to be the hourly rate. The current limit is 80% of final average compensation.

  • Reduced pension multiplier. The pension multiplier for any firefighter hired on or after May 19, 2014 is 2.5%. For all others, the multiplier remains 3.2%.

  • Member contributions. For any firefighter hired on or after May 19, 2014, the contribution to the retirement system is 7.0% of compensation. The rate for other firefighters increases from 9.08% to 10%.

For a pretty good description of current Police and Fire Retirement System plan provisions, see page 12 of the 2012 actuarial valuation.

 

Here is how final average compensation is defined in the current Police and Fire Retirement System ordinance (Chapter 294, on the city clerk's website):

Final average compensation means the monthly average of the member's final compensation that is included in "included compensation," as defined in this subsection, paid during the period of the member's 24 highest consecutive months of credited service as a police officer, or firefighter. If the member has less than 24 months of credited service, the member's final average compensation shall be the monthly average of the included compensation paid for his or her total period of credited service. For a police officer member, included compensation is defined as annual base salary, overtime pay (including holiday pay), longevity, gun allowance, clothing allowances, sick leave reimbursement (buy-back), shift premium and retroactive pay (prorated by effective date). For a Police Supervisory Division Unit member, the definition of included compensation also includes compensatory time buy-back (up to a maximum of 160 hours), provided that the compensatory time was earned in the same 24 months on which final average compensation is based. For a firefighter member, included compensation is defined as annual base salary, overtime pay, acting pay, ambulance wage differential pay, longevity, holiday pay, field training instructor pay and retroactive pay (prorated by effective date).

Calculating annual base salary is tricky for firefighters. For employees who work a regular 40 hour week, I calculate it as hourly wage times 2080 (40 times 52 weeks). But for firefighters in the Fire Suppression Division, I calculate it by multiplying hourly rate by 2799.94 (53.845 hours per week times 52 weeks per year). All this is explained in a story I wrote in January 2012.